Thanks to Paul Romer for leading this week’s brown bag discussion. The discussion focused on what Romer calls the Startup Dynamic, a dynamic that is at the heart of the charter cities concept.

Social progress depends greatly on a society’s ability to adapt its rules to changing circumstances. Rules include both formal laws but also informal social norms. Norms are socially determined notions about the right and wrong ways of doing things. For progress to be sustained, a society’s norms must evolve over time.

For example, successful shifts from hunter-gatherer societies to sedentary agriculture required an adjustment in norms about food sharing. In hunter-gatherer bands, where it was less clear when the next meal would arrive and in what quantity, social norms mitigated risk by encouraging the sharing of game with the group—regardless of whether someone had assisted in the kill. With the advent of sedentary agriculture, a social norm that permitted people to keep most of their their surplus harvest encouraged individual initiative and generated considerably more food in successful agrarian societies.

Though the evolution of social norms is central to social progress, norms tend to persist because they are socially determined. Once a group establishes a norm, the norm tends to reinforce itself as people observe one another behaving according to the norm—even incurring a cost to punish one another for straying from it. Romer argues that a key obstacle to social progress is the persistence of inefficient norms. Think, for example, about the persistence of norms that prescribe narrow roles for women in societies that otherwise aspire to develop dynamic, modern economies.

Romer believes that civic startups are a key mechanism by which people can shift away from persistently inefficient social norms. When dissidents can experiment with new ways of doing things in startups, new ways of life can emerge and, if demonstrably successful, spread to societies that would otherwise prove resistance to change. Thinking at the city-scale, Romer cites the examples of William Penn’s efforts in Philadelphia—a city that brought religious tolerance to the American colonies—and Deng Xiaoping’s efforts in Shenzhen—a city that brought market-based economic principles to communist China.

Tile image credit: YoTuT

Paul Romer

Director, NYU Stern Urbanization Project

Paul Romer, an economist and policy entrepreneur, is University Professor at NYU and founding director of the NYU Stern Urbanization Project, where he also leads the Charter Cities initiative. He is also the director of NYU's Marron Institute of Urban Management. Whereas the Urbanization Project focuses on rapidly urbanizing countries, the Marron Institute conducts research on the challenges faced by cities in all countries.

Before coming to NYU, Romer taught at Stanford University's Graduate School of Business. While there he took an entrepreneurial detour to start Aplia, an education technology company dedicated to increasing student effort and classroom engagement. Prior to Stanford, Romer taught in the economics departments at the University of California, Berkeley, the University of Chicago, and the University of Rochester. In 2002, he received the Recktenwald Prize for his work on the role of ideas in sustaining economic growth.

Romer earned a doctorate in economics from the University of Chicago after doing graduate work at the Massachusetts Institute of Technology and Queens University.

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